The different strategies and tax treatments for investing in small companies.
The Companies Act 2006 defines a small company as a business where the turnover is less than £6.5 million, the balance sheet is less than £3.26 million and there are no more than 50 employees.
However, different groups vary from this definition. The British Bankers Association for example, defines a small company as having less than £1 million in turnover and run by a sole trader, partnership or as a limited company.
Irrespective of the different definitions of a small company, everyone is in agreement that investing in small companies can offer excellent benefits to investors.
When it comes to buying and selling stocks and shares for the first time it can be intimidating. However, put aside the jargon and the process is surprisingly easy. As long as you do your research, know your goals and have a sound financial investment advice, taking your first steps into equity investment will not be as daunting as it initially appears
This guide will provide an overview of some of the things to consider when starting to invest using the stock market.
This guide financial investment advice is aimed at people looking to own shares directly, rather than invest via a collective investment fund such as a unit trust or an open-ended investment company.
Equity investment A share is a token of ownership of part of a company, the price of which reflects its overall value. For instance, if a company is valued at £100 million in the market, and offers 100 million shares, each share will be worth £1 at that point in time.
When it comes to financial decisions, understanding your attitude to risk is a key decision.
Understanding risk
Risk is a shifting and ever-present aspect of modern life and something that we all come into contact with at some point. From the adventures we have as children to the financial decisions we make as adults, our attitude towards risk is an indelible part of who we are.
When it comes to investing, however, it is important to think about risk objectively and not let our subjective emotions cloud our judgement, although our own views and opinions are very important.
Being able to do this successfully means both understanding the different risk levels of investments available in the market, but also how risk is related to the potential returns on offer.
The Companies Act 2006 defines a small company as a business where the turnover is less than £6.5 million, the balance sheet is less than £3.26 million and there are no more than 50 employees.
